GRUB originated in 1995 when Erich Boleyn was trying to boot the GNU Hurd with the University of Utah’s Mach 4 microkernel (now known as GNU Mach). Erich and Brian Ford designed the Multiboot Specification (see Motivation in The Multiboot Specification), because they were determined not to add to the large number of mutually-incompatible PC boot methods.
Erich then began modifying the FreeBSD boot loader so that it would understand Multiboot. He soon realized that it would be a lot easier to write his own boot loader from scratch than to keep working on the FreeBSD boot loader, and so GRUB was born.
Erich added many features to GRUB, but other priorities prevented him from keeping up with the demands of its quickly-expanding user base. In 1999, Gordon Matzigkeit and Yoshinori K. Okuji adopted GRUB as an official GNU package, and opened its development by making the latest sources available via anonymous CVS. See Obtaining and Building GRUB, for more information.
Over the next few years, GRUB was extended to meet many needs, but it quickly became clear that its design was not keeping up with the extensions being made to it, and we reached the point where it was very difficult to make any further changes without breaking existing features. Around 2002, Yoshinori K. Okuji started work on PUPA (Preliminary Universal Programming Architecture for GNU GRUB), aiming to rewrite the core of GRUB to make it cleaner, safer, more robust, and more powerful. PUPA was eventually renamed to GRUB 2, and the original version of GRUB was renamed to GRUB Legacy. Small amounts of maintenance continued to be done on GRUB Legacy, but the last release (0.97) was made in 2005 and at the time of writing it seems unlikely that there will be another.
By around 2007, GNU/Linux distributions started to use GRUB 2 to limited extents, and by the end of 2009 multiple major distributions were installing it by default.